What is in this article?:
- How Big Pharma Can Win in Emerging Markets
- Four Ways Big Pharma Can Stay Competitive in New Markets
Companies that are more advanced in areas such as manufacturing infrastructure, logistics, distribution and talent management -- and, of course, in understanding consumer needs and behaviors -- can gain an edge in these coveted markets.
For the past several years, life sciences companies have consistently faced the doom and gloom of the patent cliff. As widely reported by news organizations, the loss of patents for blockbuster drugs such as Lipitor, Vioxx and Zoloft were projected to impact the pharmaceutical industry’s performance for years to come. Indeed, the ratio of value created by new products entering the market versus the value lost by products going off patent declined consistently from 2002 to 2012.
But it looks like the worst is now over.
It appears the patent cliff has reached its peak, and certain companies are finding their way back to profit. While there has been no decisive solution for navigating in the post-blockbuster landscape, several high-performing, life sciences companies have turned to one option in particular—emerging markets.
Emerging Markets: The Next Big Growth Engine in Pharma
Now, more than ever before, life sciences companies are turning to emerging markets such as Brazil, Russia, India and China (BRIC countries) for new growth and a sustained advantage over the competition. The underlying data shows why. Emerging markets consist of 70% of the world’s population, generate 31% of GDP and will account for 30% of global pharmaceutical spending by 2016.
But despite the promise, many pharmaceutical firms have felt growing pains and have not yet been able to get a major foothold in these regions. In fact, analysis of the top nine pharmaceutical companies shows that less than 10% to 30% of revenues currently come from these areas.
This issue exists for several reasons. New entrants soon discover that selling and operating in these markets presents numerous challenges. Market access requirements such as supply-chain planning, manufacturing and distribution can be complex.
They also discover a regulatory environment, including taxation and import regimes, which can be significant barriers to growth, both in terms of working across borders.
There is also the need for more effective monitoring of pricing and reimbursement because they can increase. Finally, talent shortages can become obstacles to growth.